BA Content Flashcards
Agency (RST Definition)
Fiduciary relationship that arises where
- One person (the Principal) manifests assent that another person (the Agent) shall act on P’s behalf and
- Subject to P’s control, and
- A consents to act in this way
6 types of agents & their definitions
Universal Agent: authorized to perform all acts that can be lawfully delegated to a representative.
General Agent: authorized by the principal to transact all business affairs of the principal at a certain place.
Special agent: authorized by the principal to handle a specific business transaction.
Agency coupled with an interest: Agent has paid for the right to have authority for a business
Gratuitous agent: No payment is made to the agent, i.e. a favor or a volunteer
Subagents: Agent appoints other agents
Types of agent authority (just the names)
Actual Express
Actual Implied
Apparent
Inherent
Ratification
Estoppel
Actual Express Authority
- P tells A to do something & A does it
- P is bound
- Look at P’s explicit instructions
Actual Implied Authority
Necessary to complete job
A does something necessary to complete P’s actual instruction, but P didn’t tell A to do this necessary thing (but it’s within the scope of A’s duties)
Look at:
P’s explicit instructions
What else might be reasonably included in those instructions to accomplish the job
Past permission regarding similar acts
The relationship between P & A
Apparent Authority
About what what a 3rd party reasonably believes P has authorized A to do
Test: (1) P must act in a way that it seems that A has authority & (2) the 3rd party must reasonably think A has authority.
Inherent Authority
Undisclosed P is liable for the acts of an agent who proceeds within the scope of authority typically given to A with similar duties, regardless of limitations the principal imposes on that agent.
only applies to apparent authority
The law will sometimes hold an undisclosed principal liable for certain unauthorized transactions of his agent when
- A 3rd party has made a detrimental change in position
- P had notice of the agent’s conduct
- The conduct might induce third parties to change their positions; AND
- P did not take reasonable steps to notify the third parties of the facts.
Elements of agency authority of estoppel
P creates (on purpose or accidentally) an appearance of authority in A
3rd party reasonably relies on the fake authority
3rd party changes their position in reliance upon the fake authority
What’s the difference between apparent authority & estoppel?
Estoppel requires a change in position by 3rd party (apparent authority doesn’t)
Apparent authority requires a manifestation by P to the 3rd party (estoppel doesn’t)
When is P directly liable to 3rd parties for A’s torts?
A has actual authority and commits a tort
A didn’t know act was a tort and P authorized it
P negligently supervised or controlled A
Test to determine if the act within the scope of employment
Was the conduct the same general nature as A’s duties?
Was the conduct substantially removed from the authorized time & space limits of the employment?
Was the conduct at least partially motived by a purpose to serve the employer?
Factors to consider to determine if it’s employee or independent contractor
a. Extent of control
b. Is the kind of job typically done under supervision of employer or not?
c. Skill required for this particular job
d. Does the employer supply the tools and place of work?
e. Length of time the person is employed
f. Method of payment (by time, by job, salary)
g. Is the work part of the regular business of the employer?
When is P liable for torts of independent contractors?
Principal retains control over the aspect of the work in which the tort occurs
Inherently dangerous activities
Negligent hiring by principal
Nondelegable duty
Factors to consider to determine if the franchisor can be vicariously liable for torts committed by franchisees
Extent of the franchisor’s involvement in the francisee’s day-to-day operations
Franchisors’ right to control the franchisee’s operations
Franchisor’s right to terminate the relationship
Duty of Care in agency
A has a duty to P to act with the care, competence, and diligence normally exercised by agents in similar circumstances
A’s special skills or knowledge are considered (If A claims to possess special skills or knowledge, A has a duty to the principal to act with the care, competence, and diligence normally exercised by agents with such skills or knowledge)
Duty of Obedience in Agency
A has duty to act only within scope of A’s actual authority, complying with P’s instructions
Duty of Accounting in Agency
A has duty to P to:
1. Not treat P’s property as A’s
2. Not to mingle P’s property with anyone else’s
3. Manage accounts properly
Duty of Loyalty in Agency
Take no advantage from acts relating to the interest of the principal without the principal’s knowledge and consent
RST definition of partnership
A partnership is an association of 2+ people to carry on as co-owners a business for profit
Rebuttable presumption that people who share the profits of a business are a partner in the business, unless the profits were received:
- Debt service
- Wages
- Rent
- Annity
- Loans
- Sale of business or other property
Partnership by estoppel elements
- Plaintiff must establish a representation, either express or implied, that one person is the partner of another
- The making of the representation by the person sought to be charged as a partner or with his consent
- A reasonable reliance in good faith by the third party upon the representation
- A change of position, with consequent injury, by the third person in reliance on the representation
Partner’s duty of care
Limited to in gross negligence or reckless conduct, intentional misconduct, or a knowing violation of law.
Capital Contributions
Amount of money or assets given to a business or partnership by one of the owners or partners.
The capital contribution increases the owner or partner’s equity interest in the entity
Capital contribution is maintained in a “capital account” that is not income to partner
UPA - The liabilities of the partnership shall rank in order of payment, as follows
Debts to creditors of the partnership other than partners;
Debts to partners for contributions other than for capital and profits (an actual loan);
Debts to partners for capital contributions;
Debts to partners for profits (meaning, any residual value
Modifying partnership rights 3 part test
Extent of an individual’s ability to control & operate the business
Extent to which an individual’s compensation is based on business profits
Extent of employment security the individual has
3 phases of dissolution of the partnership
dissolution
winding up
final termination
Non-Judicial Grounds for dissolution without breaking the agreement
When a specific time/task ends
When any partner wants to & there’s no “definite term or specified particular undertaking”
When all partners agree
When any partner gets expelled
Non-Judicial Grounds for dissolution by breaking the agreement
Where carrying on business is illegal
Death of any partner
Bankruptcy of any partner or the partnership (In re Fulton)
Decree of court
Judicial Grounds for dissolution
Partner has been declared of an unsound mind
Partner is incapable of performing his part
Partner is guilty of conduct that affect prejudicially the carrying on of the business
Partner “willfully or persistently” breaches the partnership agreement
Business can only be carried on at a loss
A partner’s dissociation is wrongful if (UPA):
It’s in breach of an express provision of the partnership agreement or
It’s before the expiration of a term partnership and:
a. Partner withdraws by express will (unless it’s within 90 days of another partner’s dissociation by death or wrongful dissociation)
b. Partner is expelled by judicial determination
c. Partner is dissociated by bankruptcy or
d. in the case of a partner who is not an individual, trust other than a business trust, or estate, the partner is expelled or otherwise dissociated because it willfully dissolved or terminated.
Rights of shareholders in corporations
Vote on a limited range of issues
Receive payment of dividends when and as declared by board
Inspect corporate books and records
Receive distribution upon termination
Purchase proportionate share of a new issuance or corporate stock to maintain current ownership percentage (Preemptive Right)
File derivative suits to redress wrong suffered by the corporation (damages recovered belong to corporation)
Free transferability of ownerships
Required provisions of Articles of Incorporation filed with state
(1) corporate name (Must have a magic word - inc. corp. lmtd. Company)
(2) # of authorized shares
(3) street address of the corporation’s initial registered office and the name of its initial registered agency at that office (Must be in state of incorporation)
(4) name & address of each incorporator
optional provisions of Articles of Incorporation filed with state
Business purposes
Initial directors
Forum for internal corporate claims
class & series of shares
Amending the articles of incorporation – 3 step process
(1) Board of directors recommends the amendment to the shareholders
(2) shareholders approve the amendment
(3) amendment is filed with the secretary of state
